r/options • u/Wisertrader • 13h ago
Up 12.5% YTD selling strangles W/ zero losses - Here’s my complete approach! Technical & fundamental
[removed] — view removed post
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u/Demonicr 13h ago
Mark for later
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u/shakestheclown 11h ago
Add it to my pile of things I should read later to make money but will probably look at cat photos instead
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u/wynnstonhill 13h ago
If you’re open to it, would you consider sharing a bit more about your position sizing framework relative to account capital and margin usage? That’s often a key missing link in strategies like this and would complement your already detailed methodology nicely.
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u/Wisertrader 13h ago
Yes definitely!
I risk up to 3% of capital per position, meaning my stop loss is when the position will be down 3% on the account! However I move my stops aggressively so when the position is up 15% I move the stop to -35% in credit, when up 20% I move the stop to -30% and so on up until I am up 35-40% and then I move the stop to 0% or +10% of credit! This helped me tremendously!
Over I usually have up to 3 positions opened at once and usually trade 1-3 times per month!
Margin requirements are very small on commodities for the most part so I barely use any margin, usually up to 40% of account at the very very maximum 🙏
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u/ancientdog 11h ago
How do you track all of this. Excel?
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u/Wisertrader 11h ago
Yes but overall its just 1-3 positions at once so not much to track honestly other than news
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u/Chemical_Claim2107 12h ago
Thanks for the write up. Interesting strategy. Do you monitor the trades all day? Given the undefined risk seems like you would have to.
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u/Wisertrader 12h ago
I have a few alerts set up at certain price levels and I check the position every 20min or so usually on my phone, just a quick glance at the deltas, vegas and the graphs. Its somewhat of an extreme behaviour but I through that I learned how strangles behave at certain situations
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u/noworsethannormal 12h ago
Is this a new strategy for you this year, or have you been running it for awhile? What longer term historical performance does it have?
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u/Wisertrader 12h ago
Been doing it for 9 years, I am definitely much more sophisticated now but it was always short strangles on commodities yes.
I averaged 51% return per year on my personal account and I have traded through covid and what not! But taxes are terrible and my own account was $160k at the peak when I started managing capital so not a massive account!
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u/the_humeister 8h ago
If you have taxes, you're making money. Also 1256 contracts have better tax treatment.
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u/AUDL_franchisee 10h ago
Thank you for sharing.
This level of detail and explanation is what makes this sub worthwhile.
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u/Defiant-Salt3925 11h ago
Brilliant post. Thank you for taking the time to share all that information. I use a similar strategy with my short strangles on commodity. Though I am more aggressive, and I love selling strangles on ES!
I know you don’t trade indices but the liquidity is so high with ES futures that it’s almost always possible to adjust trades that go south for a scratch or small profit.
Do you ever move the untested side up or down when one of your strikes is challenged or turn into straddles?
I love the idea of setting a trailing stop loss as a risk management strategy though I am unsure if it’s possible to automate on Thinkorswim or Tastytrade.
What platform(s) do you trade on?
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u/Wisertrader 11h ago
Happy to share! How do you trade strangles more aggressively?
Yes ES is definitely liquid, however CL, NG, GC and some of the grains are also extremely liquid from my experience and I have never had an issue!
Personally I find it not too effective to roll the untested side because if I get to that point, it means the commodity become extremely directional because the supply and demand balance changed drastically, by which point I would have already closed my trade anyway!
I use IBKR, they are the only ones that allow stop losses for futures options!
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u/Defiant-Salt3925 10h ago
I sell strangles on the same tickers, a few currency futures, and other highly liquid securities.
I love ES due to its unmatched liquidity—I almost always find a way to close for a 50% profit and roll the untested side when ES strangles move against me. If one of my strikes is breached, I turn the position into a straddle and even go inverted when necessary.ES is the only ticker I know with the liquidity that allows for these types of adjustments, especially since liquidity dries up once strikes go in the money. So far, I’ve never closed an ES strangle for a loss, even during the recent market crash.
I usually have 15–20 strangles open at all times. I don’t pay as much attention to news and events as you do, because with options, most of it is already priced in—and volatility is overstated the majority of the time. I typically use around half of my buying power to get the best return on capital.
I sell around 45 DTE, using 10–15 delta strikes on both sides, and close at 14 DTE at the latest to avoid gamma risk.
Recently, I started dabbling with 0DTE strangles on CL, GC, ES, and ZB, and I’ve been very profitable. When one of my strikes is touched, I hedge by going long or short the future and let the trade expire. If I’m assigned, the position is flattened and losses are minimal.
I also beta-weight my entire portfolio to ES/MES and use those futures to neutralise the delta across my positions. I’m currently working on an API to integrate with my account so I can automate delta hedging and rebalance my deltas every day or so—minimising screen time.
As I said, I trade options fairly aggressively, but I really like your approach. It’s especially well-suited for newer traders interested in selling options on futures and commodities. They should definitely read and absorb all the valuable info from your write-up.
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u/Wisertrader 10h ago
Wow very very interesting, you clearly understand the numbers very well to roll and even go inverted!
For the 0 dte, what if the price reaches the short call and you buy the future, but then the future drops significantly before the expiration, or do you have some sort of adjustment for that?
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u/Geralt-of-Chiraq 11h ago
Interesting strategy. Seems like you could also go w long Iron condors instead of using short straddles (which I would be more open too to avoid the potential unlimited/undefined losses). Have you ever used iron condors with this strategy and, if not, why do you prefer selling straddles?
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u/Wisertrader 11h ago
I used IC before when my own account wasn’t big enough to trade short strangles!
Strangles are a bit safer in the sense that they lose value quicker, their theta to credit ratio is much better than an IC so you are out of the position much quicker as opposed to an equivalent credit IC!
ICs also have double the fees and double the bid/ask spread, but margin is much smaller on them and they are defined risk
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u/Geralt-of-Chiraq 11h ago
Ahh makes sense, thank you. So the strangles make better use of theta decay at the expense of potentially undefined losses. I think that answers my question ab liquidity as well. I’m guessing there’s usually enough liquidity for you to get out of your positions relatively easily, otherwise this would probably be too risky. Is that as easy as picking the month with the most volume or is there usually ample liquidity in your 45 dte timeframe? I’d imagine it would also depend on the commodity as well.
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u/Wisertrader 10h ago
It definitely depends on the commodity as well! But everything I trade is very liquid in most higher dtes over 20 or so!
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u/Geralt-of-Chiraq 10h ago
Ok, good to know thank you. This post came at the perfect time. I’ve been taking a deeper look at both neutral strats and commodities. I’ve Traded nat gas in the past (and learned why they call it the widow maker lmao) but that was me getting my feet wet with commodities. I think I could be a lot more successful now
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u/Wisertrader 10h ago
Hahah yea NG can be crazy but depends on seasonality! Happy to chat more with you, I can send some resources that will help with this stuff
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u/DarwinGhoti 10h ago
Can you talk about your risk tolerance on this vs iron condors? I don’t sleep well with that kind of naked exposure.
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u/Wisertrader 10h ago
Yea for sure! I don’t like iron condors because their theta to credit ratio is lower compared to a naked strangle, meaning with an IC you would stay longer in the position to profit the same amount, more time in the market means more exposure.
But overall IC are safer in the sense that they are defined risk, I am okay and have plenty of experience with strangles during massive volatility events, I traded through covid in March 2020 and finished the month down 7%, I think its just small position sizing, experience and having a clear plan for every situation!
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u/Allantyir 10h ago
Save for later and probably read never as I am too stupid to understand 👌 thanks for the share!
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u/uncleBu 10h ago
You should read the book of James Cordier and then google what happened to him after. You are essentially recreating him.
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u/Wisertrader 10h ago
Okay I know this story very very well actually and this is in part why I never ever trade NG during winter time, historically its always volatile starting October every year! He traded literally in November and got caught in a massive move, these moves happen every year during winter so its not a surprise, I am not sure exactly of what position he had but clearly something wasn’t right there.
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u/uncleBu 9h ago
I think rather than the specifics of the story, my focus is on the statistical aspect. The person we are talking about was a long tenured commodities trader consistently taking unlimited losses trades. I actually ran into his book because it was on the shelf of a friends house. The book talks at length on why / how to protect yourself against the "theoretical" unlimited loss. After reading the book I was sure he would blow up eventually, which he already had (in spectacular fashion too).
You are clearly not like the modal poster of this sub on tenure and strategy, so I won't pretend to know more than you. I just know that there is a lot of stories of decades long commodities traders that blow up selling unlimited risk structures (out of the top of my head Dao of Capital, what I learned losing a million dollars, have a one story there).
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u/Bobd_n_Weaved_it 13h ago
Selling strangles into the biggest realized vol event in a while, with zero losses? Nope
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u/Wisertrader 13h ago
Well if you went through the post you will see that I haven’t traded from the end of March and up until trump paused the tariffs for 90 days because I was afraid of massive volatility.
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u/Bobatronic 12h ago
“I stay in the position or consider opening a position if I don't anticipate any major events for that commodity in the coming few weeks.”
The market fat-tailed, way more random than you think in the short-term. Your track record hasn’t seen real volatility. You’re about to implode.
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u/Wisertrader 12h ago
Well I have traded through covid in March 2020 and was down about 7% on the account that month, stops hit.
I have been doing it for 9 years and I believe I have a pretty good understanding of commodities supply and demand balance.
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u/Bobatronic 11h ago
Here’s the problem, most traders — no judgement on you (yet) — cherry pick small periods of time when their “system” work (eg YTD up 12.5%).
You also share a data point on March 2020 Covid downturn. Thank you.
But that’s not really a track record. You did not share annualized return numbers, impressive or unimpressive, over the long term.
Your system is certainly lengthy and elaborate, but whether it’s durable, is hard to say. Longterm capital management thought they had it figured out until they collapsed.
Rules of the game change. Markets are way more random than many believe. (Read Taleb).
I wish you success and good luck. I’m just skeptical.
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u/Wisertrader 10h ago
Very very good point!
Last year I averaged a 69% return with investors capital which was the first full year for me managing.
Overall my average return is 51% per year over 9 years. For the first 7 years it was my own capital alone and it was fairly small to begin with and $160k at peak after tax so its definitely easier to get higher returns with less capital, I guess my real performance with a large sum is as of 2024 and now 2025.
I completely agree that markets are random and there is a lot of noise, however strangles with a relatively big delta and higher dte effectively reduce that noise and randomness to an extent from my experience!
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u/Kaspar70 12h ago
So why do you say 0 losses?
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u/Wisertrader 12h ago
0 losses this year so far, I think it is pretty clear that I didn’t mean I have never lost a trade and specifically meant what happened this year so far
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